In the early 19th century, a strange contradiction haunted the minds of economists and moral thinkers alike:
Why, in a world of growing production, do so many still go without?
Why do goods pile up unsold, while bellies remain empty?
Why does the engine of progress sputter — not from scarcity, but from surplus unmet by means?
This question gave birth to a current of thought that flowed beneath the rising tide of classical economics:
the theory of under-consumption.
While others preached confidence in the self-adjusting market,
while supply and demand were celebrated as perfect dance partners,
a handful of voices paused —
and listened for the rhythm that no one wanted to hear.
James Maitland, Earl of Lauderdale.
Thomas Robert Malthus.
Jean Charles Léonard de Sismondi.
Each saw something others missed.
That production does not guarantee prosperity.
That more is not always better.
That the market, left to itself, may produce plenty without purpose.
Lauderdale: The Paradox of Wealth and Value
James Maitland, better known as the Earl of Lauderdale, asked a radical question:
What happens when private wealth grows, but public wealth declines?
In his Inquiry into the Nature and Origin of Public Wealth (1804), he distinguished between private riches — the command over scarce goods — and public wealth, which he defined as abundance accessible to many.
And here, he saw a paradox:
The more abundant something becomes, the less value it has in private terms.
If clean air is free and plentiful, it has no price — and thus, no place in the economy.
But pollute it, and its scarcity can be monetized.
Lauderdale’s insight was chilling:
In a system where value is measured by price, there may be no incentive to create abundance that benefits all.
Instead, scarcity becomes profitable.
And so, he warned, markets could be driven not toward shared well-being,
but toward inequality, artificial scarcity, and ultimately, under-consumption —
where many lack the means to buy what they need,
while others profit from holding goods just out of reach.
Malthus: Demand as a Moral Necessity
Though more famous for his population principle, Thomas Malthus also played a vital role in shaping under-consumption thought.
In the aftermath of the Napoleonic Wars, Britain experienced stagnation —
factories idle, goods unsold, workers hungry.
Malthus challenged the classical orthodoxy — particularly Say’s Law, which claimed that every supply creates its own demand.
He didn’t believe it.
In Principles of Political Economy (1820), Malthus argued that saving — though virtuous — could reduce spending.
If everyone saves and no one spends, goods accumulate without buyers.
What was needed, he claimed, was a class of consumers who did not produce —
landowners, clergy, government — to maintain effective demand by spending their income.
Critics mocked him for defending the idle rich.
But Malthus wasn’t defending class —
he was warning that economies depend not only on what is made,
but on what is bought.
In his view, demand was not a luxury — it was a lifeline.
Sismondi: The Human Cost of Overproduction
While Lauderdale and Malthus diagnosed the imbalance,
Jean Charles Léonard de Sismondi gave it a face.
A Swiss historian and economist, Sismondi saw first-hand the devastation wrought by industrial capitalism.
He did not see efficient markets.
He saw broken families, displaced workers, growing slums.
In his Nouveaux Principes d’économie politique (1819), he rejected the idea that production alone equals prosperity.
Sismondi asked:
What good is more cloth if the weavers starve?
What good is growing output if the people who make it cannot afford to live?
He argued that capitalism’s relentless drive to produce led to crises of overproduction,
where supply vastly outpaced demand.
Prices fell. Wages collapsed. Factories closed. Misery spread.
His solution?
Regulation, redistribution, and reform.
He believed the economy must serve people, not abstractions.
That consumption must be protected, not assumed.
And that the health of a nation was measured not by exports, but by how its workers lived.
A Theory That Would Not Die
Under-consumption theories never dominated.
They were dismissed by orthodox economists as gloomy, misguided, or politically suspect.
And yet — they never disappeared.
Because reality kept calling them back.
The Great Depression made them newly urgent.
Keynes, though not a direct disciple, echoed their concerns:
that demand matters,
that saving can become a trap,
and that governments may need to step in to restore balance when markets fail.
Today, we live in a world shaped by the very problems they foresaw:
– Overproduction alongside poverty.
– Massive corporate profits alongside stagnant wages.
– The hoarding of value by the few, while the many cannot afford the goods they help create.
The question they asked remains:
What is an economy for, if it cannot feed its own people with what it makes in abundance?
A New Kind of Demand
To think meaningfully about under-consumption is to think morally about consumption itself.
Not to encourage mindless buying.
But to build a system where demand is just,
where people have the means to live well,
and where production is aligned with care, not just accumulation.
Lauderdale saw the distortion of value.
Malthus warned of demand’s fragility.
Sismondi cried for the worker left behind.
Together, they gave us a vision that economics often forgets:
That what we produce means little
if it cannot be shared.
That a growing economy can still shrink the soul
when it fails to include.
Under-consumption is not just a theory of markets.
It is a mirror held to the systems we build —
asking, again and again,
Why do we make so much, and share so little?
And in that mirror,
perhaps we begin to see not just an economic flaw,
but a moral one —
waiting still
to be redrawn.